Towers Watson Projects Employer Health Care Costs Will Increase 5.3% In 2013; Employers Remain Committed To Health Care Plan Sponsorship

The actions and programs that companies are planning or considering include changing plan options (63%), significantly reducing subsidization of coverage for spouses and dependents (38%), and using spousal waivers or surcharges (29%). Additionally, some employers will pass along a greater percentage of costs to employees. Thirteen percent plan to increase their employees’ share of health care of premiums in 2013 by five percentage points or more, while 42% plan to increase employees’ share by one to five percentage points.

“Affordable health care remains a top priority for employers and a key component in employee value propositions,” said Randall Abbott, senior health care consulting leader at Towers Watson. “However, due to the increasing costs of medical benefits and the additional burden of compliance, business leaders need to keep the pressure on to control costs, increase workforce accountability and engage workers to lead a healthier lifestyle.”

Other notable trends and data points from the survey include:

• More than three-quarters (77%) view health care benefits as core to their employee value proposition over the next several years, and more than one-third of companies will examine their health care benefits in a total rewards framework by 2013. Another 39% are considering doing so by 2014 or 2015.
• The strong growth of account-based health plans (ABHPs)** is expected to continue. By 2015, 80% of employers plan to offer an ABHP, up from 61% in 2013. The enrollment within ABHPs continues to increase significantly, moving from single-digit numbers in 2006 to an expected 30% for employers offering these plans in 2013.
• Health care delivery continues to evolve, which is leading to the acceleration in use of telemedicine services. Seventeen percent plan to offer telemedicine by 2013, and another 27% are considering offering it by 2014 or 2015.

*Excise tax: According to the Patient Protection and Affordable Care Act, the federal government will impose an excise tax of 40% on insurers of employer-sponsored health plans, including self-insured employers, with an aggregate value of more than $10,200 for individual coverage and $27,500 for family coverage.

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